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Digg In Acquisition Talks

Well, well, well. The day after Google purchased YouTube for $1.65 billion I made a post asking is Digg next? The story made it to the front page of Digg but then got buried because some diggers thought I was just making things up. Looks like I’ll be getting the last laugh.

While Digg will never publicly state that they are for sale, I got even money that says they are open to offers. Back in January there was a rumor that Yahoo offer $40 million for Digg. According to this Business article, Digg is worth at least $200 million, even though they are only breaking even right now. Is a company with just $3 million a year income worth $200 million? I doubt it, but we are in the middle of Dot Com Bubble 2.0, where pricing a website makes absolutely no sense. With these kinds of crazy valuations, the question isn’t whether Digg is for sale, the question is when Digg will be sold.

Looks like the question is about to be answered real soon.

14 thoughts on “Digg In Acquisition Talks”

It’s hard to believe that YouTube was worth $1.6B, but when you factor in that users spend an average of 18 minutes on YouTube (I think that’s correct), that is a lot of face time – which is part of what Google was buying.

Not sure what the average face time on Digg is, but this has to be factored into the price.

The best answer I can give you is that when a site is created by “two guys” it becomes so deeply associated with those “two guys” that they become inseperable to the user base.

In the case of Digg (and Diggnation) The faces of Alex and Kevin ARE Digg.

Remember Bartles and James? What about Ben and Jerry? Did you notice how tightly ingrained those duo’s were with their products? It was a long time before those products could stand on their own with the marketing duo behind them.

Google already runs the search game…so why not? It might make sense for NewsCorp. Since I’ve been introduced to Digg.com, I’ve read countless stories from various newspapers, although I can’t recall one I read from the New York Post…but still. Anything to stay on top of the story. Next thing you know, I’ll have a Digg channel on my DirecTV menu…all hosted by Bill O’Reilly. Yikes.

I would have to agree with HMTKSteve. While this is especially true in the tech world (Bill Gates, Steve Jobs, Alex and Kevin, Marc Fleury, etc.) the identity of a company being associated with an individual happens in other areas as well.

Just last night I was having dinner with my dad and uncle and my dad, recently retired, asked my uncle if he thought about retiring as well. Well, my uncle owns his own business and he said that, other than enjoying what he is doing, when an organization of any sort is built on the principles of its founder and that founder leaves, the organization tends to fall eventually unless the new owner has the same principles. Naturally this doesn’t always apply, but in most cases it does.

Digg would be a MUCH smarter buy than YouTube. Digg is already huge in the tech savvy demographic, but imagine the explosion in users if Digg news made worldwide headlines as the result of oh I don’t know a ~$1 billion sale? Digg won’t die as the result of a sale, it will skyrocket.

Not to mention the extra perks for Google (if they were the ones to buy it) since they already have good Adsense monetization going on, all of that money would basically just circle around Google’s bank account. I’m calling we’ll see Facebook and Digg sold within the year!

Their first round of funding (they haven’t done any since then) was only for $2.5 million or so. Selling the site for $150 million would be a pretty a good return for the VCs. If Digg doesn’t sell, they will have to do 2nd funding round. That tells me Digg is not breaking even as was first suggested. If they were breaking even, they wouldn’t need a 2nd round.

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John Chow rocketed onto the blogging scene when he showed the income power of blogging by taking his blog from making zero to over $40,000 per month in just two years.